Natlata: PetroNeft shareholder restriction notice a clear abuse of power

Natlata Partners Ltd has received a Restriction Notice from the Company that, unless withdrawn, is effective as of 14 April 2016 and will prevent Natlata from attending, speaking or voting at the Company’s upcoming Extraordinary General Meeting. This meeting was called by Natlata and is due to be held in Dublin on 18 April 2016.

PetroNeft’s basis for such a restriction is that it allegedly sent a letter to Natlata on 17 March, requesting information, which it already possessed, about Natlata’s beneficial ownership, with a seven-day deadline to reply. Only after the deadline had passed did PetroNeft actually send the letter by email to Natlata along with the restriction notice itself.

Maxim Korobov has always been open that he is the beneficial owner of Natlata, and has already confirmed repeatedly to the Company that he controls Natlata’s 208 429 458 shares in PetroNeft.

Given this, the restriction notice would appear to be a clear breach of the proper purpose rule. The recent ruling by the Supreme Court of the United Kingdom found that similar moves by an incumbent board to disenfranchise shareholders were unlawful and an abuse of the directors’ powers. Sizeable costs were awarded against that company.

Natlata’s Maxim Korobov said: “This is nothing more than a blatant and desperate attempt for the directors to deflect attention away from their chronic underperformance. To serve a restriction notice in this way after allegedly sending us a letter requesting information that they already have, seemingly using the slowest possible means to ensure the letter didn’t actually reach us in time, is a simple case of legal chicanery to try to prevent what they may now appreciate to be the reality, namely that a majority of shareholders in PetroNeft may summarily vote four of them out of office on 18 April.”

“This is shocking corporate governance from the PetroNeft Board. Having failed to frighten us off with their attempt at a poison pill with the alleged terms of the recently announced US$35 million financing from JV-partner, Oil India Ltd, the board have now tried to prevent the Company’s largest shareholder, with a nearly 30% stake, from exercising its legitimate rights at the forthcoming EGM. The notice of these restrictions has been issued on the basis of no evidence. The UK Supreme Court took a dim view of this in a similar case and we are therefore considering all appropriate actions. Not only will we seek to preserve our rights as a shareholder but we also put the directors on notice that we will consider measures against them both collectively and individually to recover the costs of this profligate action incurred both by Natlata but also by the Company as a whole,” Korobov continued.

“Investors from around the world invest in companies listed on stock exchanges in places like London and Dublin because of the protection of rights that they afford to all investors. The self-serving actions by the board of PetroNeft to try to prevent their largest shareholder exercising its legitimate rights are clearly wrong.”

To remove any further excuse for the board on this matter, Natlata has written to the Board of PetroNeft completely addressing all questions raised in the two letters. In doing so Natlata has required that they receive notification by 11.59pm (UK time) 4 April that these the restriction notice is withdrawn.